Foreign Directors in Indian Companies: DIN, DSC, Resident Director and KYC

By Nagavarapu Sudheer, M.Com., F.C.S., L.L.B., Partner, A2 Consultants

Most Indian subsidiaries of foreign groups have at least one director who lives abroad, often a regional CFO or a group legal head. Appointing them is straightforward on paper, but the steps involve notarised and apostilled documents, Indian digital signatures and annual KYC, and a mistake can leave the company without a valid board or expose the directors personally. This guide covers what group companies need to know.

How many directors, and who must be resident?

• A private company needs at least two directors (a public company needs three).
• Under section 149(3) of the Companies Act, 2013, at least one director must have stayed in India for a total of at least 182 days in the financial year. Foreign nationals can count if they meet the test, but in practice most groups appoint an India-based executive or a trusted resident professional to satisfy it.
• An LLP needs two designated partners, at least one of whom must be resident in India (120 days in the financial year).

If the only resident director resigns, the company is immediately non-compliant. Plan replacements before resignations take effect, particularly when a local manager leaves.

Step 1: Digital signature certificate (DSC)

Every director needs a Class 3 DSC issued by an Indian certifying authority to sign MCA forms. Foreign nationals typically provide a passport and address proof, notarised and apostilled in their home country (or consularised where the country is not a party to the Hague Apostille Convention), plus a video or mobile verification by the certifying authority. Allow one to two weeks if documents have to be couriered.

Step 2: Director Identification Number (DIN)

A DIN can be obtained at incorporation through SPICe+, or later through Form DIR-3 for an existing company. For foreign nationals, the key documents are:

• passport (the passport is the identity proof for foreign nationals);
• proof of address not older than the prescribed period, such as a bank statement or utility bill;
• a recent photograph;
• all foreign documents notarised and apostilled or consularised as above.

Names and dates of birth must match exactly across the passport, DSC and DIN application; mismatches are the most common reason for rejection.

Step 3: Appointment and filings

1. The director gives written consent in Form DIR-2 and a declaration that they are not disqualified (Form DIR-8).
2. The board appoints them as an additional director (or the shareholders appoint them, depending on the articles).
3. The company files Form DIR-12 with the Registrar within 30 days of appointment.
4. The director discloses their interests in Form MBP-1 at the first board meeting and at the first meeting of every financial year.
5. The company updates its register of directors and key managerial personnel.

Managing directors and whole-time directors

Appointing a foreign national as managing director or whole-time director brings extra conditions. Under section 196(4) and Schedule V of the Companies Act, a managerial person who is not "resident in India" for this purpose (broadly, someone who has not stayed in India continuously for at least 12 months immediately before the appointment) does not meet the Schedule V conditions, so the appointment needs Central Government approval. Where they will work in India, they also need an employment visa and must be on the Indian payroll for the India-taxable salary.

Annual KYC: do not let a DIN lapse

Every director with a DIN must complete DIR-3 KYC by 30 September each year. Under the 2025 amendment, the full DIR-3 KYC form (with DSC and professional certification) is now needed once every three financial years, with the simpler OTP-based DIR-3 KYC Web in the intervening years. A missed filing deactivates the DIN from 1 October and attracts a Rs 5,000 fee to reactivate. A director with a deactivated DIN cannot sign filings, which can block annual returns, bank changes and fund-raising.

Keep each foreign director's personal mobile number and e-mail current with the MCA, as OTPs go there.

Personal liability: what foreign directors should know

• Directors can be treated as "officers in default" for missed filings, especially where they are the only directors or have been named as responsible.
• Non-executive foreign directors are generally liable only for acts that occurred with their knowledge, consent or connivance, or where they did not act diligently (section 149(12)). Board minutes that show what they were told matter.
• A director of a company that fails to file financial statements or annual returns for three continuous years is disqualified for five years from being appointed in any Indian company (section 164(2)). This often catches directors of dormant group companies.
• Directors' and officers' liability insurance with India cover is worth having for groups with several Indian entities.

Tax and payments to foreign directors

Sitting fees and commission paid to non-resident directors are taxable in India and subject to withholding at the applicable rate, with treaty relief available on a tax residency certificate and Form 10F. Remittances need Form 15CA/15CB where applicable. Reimbursed travel for board meetings should be documented as reimbursement, not income.

A practical checklist

1. Map every Indian entity's board and confirm one resident director in each.
2. Track DSC expiry dates and DIR-3 KYC due dates for every director.
3. Keep certified passport and address documents on file for quick filings.
4. File DIR-12 within 30 days of every appointment and resignation.
5. Review dormant entities for missed filings before they trigger section 164 disqualification.

For the wider compliance year, see our FEMA compliance calendar for foreign-owned Indian companies.

Talk to A2 Consultants

A2 Consultants manages board appointments, DSCs, DINs and annual KYC for foreign-owned Indian companies, and acts as company secretary for groups with several entities. The first conversation is free: book a 30-minute call at www.a2consultants.in or write to sudheer@a2consultants.in.